South Africa’s biggest telecoms employer cut 51,000 jobs since 1999

Telkom, South Africa’s biggest telecommunications employer since 1994, has cut 51,360 jobs over the last 25 years.

Telkom’s annual results for the year ended 31 March 2024 showed that Telkom has 9,877 employees, down 15% from 11,624 a year earlier.

The staff cuts over the last year formed part of a restructuring process in February 2023 to reduce costs.

The restructuring process included voluntary early retirement packages and voluntary severance packages for all employees.

More than 1,700 employees were affected, resulting in restructuring costs of R1 065 million, and the related tax impact of R288 million was recorded.

After restructuring, Openserve had 4,532 employees, BCX had 4,032, Gyro had 95, and Telkom Company had 1,218.

Telkom’s lower staff numbers helped it cut employee expenses by 4% from R8.2 billion to R7.9 billion.

The company added that there were no salary increases for management and a 5.0% average salary increase for bargaining unit employees.

Telkom’s latest staff cuts and retrenchments followed numerous similar processes over the last two decades.

The operator reduced the number of employees from 61,237 in 1999 to 9,877 in 2024, an 84% decrease.

This may look like a company in terminal decline. However, the staff cuts involve more than poor performance.

Telkom was founded in 1991 when the Department of Posts and Telecommunications split into Telkom and the SA Post Office.

As a government department, Telkom enjoyed a legally protected monopoly which helped it to sustain a bloated workforce.

Like Eskom, Telkom used to increase its prices based on its operational requirements rather than market forces.

However, things started to change around twenty years ago as it was set to lose its monopoly and list on the Johannesburg and New York stock exchanges.

Telkom was no longer a state department, and investors were looking for an efficient company that would provide good shareholder returns.

Telkom started cutting staff and reduced its workforce from 61,237 in 1999 to 23,520 ten years later.

Despite significant resistance from trade unions, these staff cuts continued as Telkom’s operations changed.

Despite the significant staff cuts since the early 2000s, Telkom was still considered inefficient and out of sync with its peers.

When measured against metrics like revenue per employee and subscriber per employee, Telkom still lagged behind competitors like Vodacom and MTN.

Another reason for the staff cuts was a changing technology mix. Telkom launched its own mobile operator in October 2010, and it invested heavily in wireless technologies.

Fixed line services like ADSL and POTS require a technician to install lines and visit a home or office to fix faults.

These services required thousands of employees to ensure customers receive the services they pay for.

However, Telkom’s fixed access lines declined from 5.1 million in 1999 to 609,000 in 2024, an 88% decline accompanied by wide-scale job cuts.

Mobile and fixed-wireless services do not require technicians to visit clients, removing the need for thousands of Telkom technicians in vehicles.

Telkom, therefore, continued to reduce its staff numbers through voluntary retrenchment packages, voluntary early retirement packages, and retrenchments.

These initiatives helped the company to become more sustainable and significantly increase its revenue per employee.

Revenue per employee is a measurement of productivity and efficiency that shows the revenue generated per person working at a company.

It is a valuable measure to determine the efficiency and productivity of a company’s average employee.

Over the last 25 years, Telkom increased its revenue per employee from R376,000 to R4.4 million.

Simply put, it means that Telkom has significantly improved the productivity and efficiency of its workforce since 1999.

The charts below show Telkom’s staff cuts and the accompanying improvement in revenue per employee from 1999 to 2024.